Grain Bulk Handling Saga

Posted on15 February, 2009

Prime Minister Raila Odinga and Agriculture minister William Ruto have sharply differed over whether or not the Grain Bulk Handlers Limited should continue enjoying the monopoly of handling bulk grain at the port of Mombasa.

While Ruto wants more firms to be licensed to undertake similar activities as those of GBHL, Raila has persistently defended the status quo arguing that GBHL was still under-utilised. But Ruto maintains that competition was necessary and that the government should license as many other firms as necessary, saying currently the other handlers in the market were too small effectively giving GBHL monopolistic status.

And a fortnight ago Ruto rebuked GBHL management after the firm placed advertisements in the media defending itself against a range of accusations. The agriculture minister told the firm's management that it had no business commenting on whether or not Mombasa needs a second bulk grain handler.

The minister said the decision to license other players was the prerogative of the government. "Grain Bulk should not try and go to lengths to explain an issue that is essentially for the government to determine," Ruto was quoted saying immediately after GBHL had placed advertisements in the daily papers titled "Lies peddled against GBHL in the media".

A tender by the Kenya Ports Authority inviting bids for a second grain handler late last year was suspended at the eleventh hour through the instigation of Raila in a move that has since raised hue and cry among players interested in investing in the sector.

However, the insistence by Ruto against Raila's wishes to have a second bulk grain handler would further raise political temperatures in ODM, which of late is staring at imminent split.

Mvita MP Najib Balala in whose constituency GBHL stands was also said to be in support of a second bulk grain handler. The owners of GBHL do not see eye to eye with Balala. It is instructive to note of late Balala is not in good books of the PM. He hardly attends his functions.

There are speculations that soon rather than later Balala will make a major political move with the pontential to shake ODM to its very foundations. Other rumours also have it that Balala may be kicked out of the cabinet by Raila and replaced by Kisauni MP Hassan Ali Joho who of late seems to have mend fences with the premier.

Ruto is said to enjoy good rapport with the executive Chairman of Mombasa Maize Millers Mohammed Islam Ali who the Minister recently appointed to the board of trustees of National Cereals and Produce Board (NCPB).

It is imperative to note, Mombasa Maize millers (MMM) is one of those firms monopolizing the milling industry in the country.

Mombasa Maize Millers controls 33 pc and has eight mills spread across the country. In Nairobi, it runs the former Kabansora Mills located in Industrial area. In Kisumu, the Mohammed Islam Ali group has acquired Swan Millers while in Nakuru, it has bought Grain Milling Corporation.Back in Nairobi, MMM is also in-charge of Ex-SupaFlo Mills while in Mombasa where it has its headquarters, MMM acquired Ex-Milly, and runs its original plant.

Confirmed reports by Weekly Citizen also reveal that MMM has in its tag, ex-Bayusuf Grain Millers located in Nairobi.

Pembe Group follows with is second with 18 pc while Premier also with two mills enjoys 16 pc in the milling market.

Analysts in the industry reveal, the combined capacity of MMM, Pembe and Premier stands at 3,320 metric tonnes which adds to 67 pc.

It is emerging, other directors of MMM have been pushing Ruto to okay a second gram terminal the reason being that they are importers, millers and distributors and the only link missing to monopolise the grain trade industry is handling at the port.

The other MMM directors caught in the saga are Ahmed Bin Ali and Ali Islam Ali. They are known to entertain Ruto whenever he is in Mombasa.

Dealers in the field openly state that world prices, government taxes and local handling costs affect flour prices in the shops.

Kenya has in the recent past imported the bulk of its requirement of wheat, as land under wheat acreage is insufficient to produce the quantity required. Over the past year mere have beensignificant reductions to the cost of wheat arriving at the port of Mombasa.

However, much as is the case for fuel prices, these reductions have not been reflected in changes for the consumer.

In 2007 there was a shortage of wheat on world markets, leading to scarcity and resultant price increases. The price of flour in the shops soared, reaching around Sh 120 for a 2kg bag.

In 2008, the supply side of world wheat production improved, and wheat followed the trend downward of a number of other commodities. Coupled to this, the Government intervened to reduce import duties on wheat, a move which aligned Kenyan millers more closely with their regional competitors.

Has this cost reduction benefited consumers? An analysis of relevant data indicates otherwise.

4 Responses to Grain Bulk Handling Saga

Anonymous
said...

It is clear that Mombasa Maize Millers is trying to momopolize the Kenyan grain market. MMM is already carteling the entire grain milling sector with the help of Pembe Mills. Together these companies are artificially keeping the price of wheat and maize flour sky high.

The only thing that stands in MMM's way is control of the grain handling at the Port. Thankfully Grain Bulk Handlers is an independant common user terminal that does not fall under the control of this milling cartel. No matter how much pressure MMM & Pembe extert via their buddy Ruto, a 2nd grain terminal in their hands would grant this milling cartel 100% price control over Kenya's staple foods. THERE SHOULD BE NO SECOND GRAIN TERMINAL CONTROLLED BY MMM & PEMBE!!! The government should investigate Ruto's relationship with Mr. Islam Ali the owner of MMM.

Come on Kenya!!! Wake up This cartel of Mombasa Maize Miller, Pemba and ATTA are robbing Kenyans. The price of Important wheat 5 months ago into Mombasa was in the range of $450 per ton and today the price is in the range of $200 per ton this is almost a 50% drop in the price of the commodity further more the Kenya government has dropped the duty on imported wheat to a maximum of $50 per ton. YET Kenyans have seen no decrease in the price of wheat flour infact they recently saw another increase.

This has little to do with another Grain Terminal and everything to do with the "CARTEL" monoplizing the importation, handling, Milling and distribution of wheat flour at the expense of the stuggling citizens of Kenya

thanks for enlightening us but whom do you run to. kibaki is corrupt, Railla's hands are tied and all the other ministrs have taken after the president, if you demonstrate the proud extrajudicial killers will have a reason to smile- they'll do their job(kill you)

Raila's hands might be tied (?!) but his tongue is as loose as the legendary Okondo. Fishy how he'd block Ruto and Balala's support for competition in the Grain handling business....Even more fishier are allegations against his maize-thieving spawn. His hands are tied--yeah right--tell it to the birds.